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The external returns to education: UK evidence using repeated cross-sections

Author

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  • Rebecca Riley

  • Simon Kirby

Abstract

Augmenting a Mincerian earnings function with industry level data we estimate the external return to schooling for a repeated cross-section of individuals in the UK over the period 1994-2004. We find that a one year increase in the industry average level of schooling is associated with an increase in individual wages of 2.6 to 3.8 per cent, between 43 and 61 per cent of the private return to schooling. We illustrate the sensitivity of these estimates to the ICT and capital intensity of industry level production, the union density of the industry, and individuals' own level of schooling.

Suggested Citation

  • Rebecca Riley & Simon Kirby, 2007. "The external returns to education: UK evidence using repeated cross-sections," National Institute of Economic and Social Research (NIESR) Discussion Papers 291, National Institute of Economic and Social Research.
    • Handle: RePEc:nsr:niesrd:291
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    Cited by:

    1. Michael Landesmann & Sebastian Leitner & Robert Stehrer & Terry Ward, 2009. "Skills and Industrial Competitiveness," wiiw Research Reports 356, The Vienna Institute for International Economic Studies, wiiw.
    2. Ozan Bakis & Nurhan Davutyan & Haluk Levent & Sezgin Polat, 2010. "External Returns to Higher Education in Turkey," Working Papers 517, Economic Research Forum, revised 04 Jan 2010.
    3. Wen Fan & Yuanyuan Ma, 2012. "Estimating the External Returns to Education: Evidence from China," Working Papers 201220, School of Economics, University College Dublin.
    4. Andrés Rodríguez-Pose & Vassilis Tselios, 2012. "Welfare Regimes and the Incentives to Work and Get Educated," Environment and Planning A, , vol. 44(1), pages 125-149, January.
    5. Matthew Calver, 2015. "Closing the Aboriginal Education Gap in Canada: Assessing Progress and Estimating the Economic Benefits," CSLS Research Reports 2015-03, Centre for the Study of Living Standards.
    6. Paul Verstraten, 2018. "The scope of the external return to higher education," CPB Discussion Paper 381.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    7. Stenberg, Anders, 2011. "Using longitudinal data to evaluate publicly provided formal education for low skilled," Economics of Education Review, Elsevier, vol. 30(6), pages 1262-1280.
    8. STRAWINSKI Pawel, 2009. "External Return to Education in Europe," IRISS Working Paper Series 2009-09, IRISS at CEPS/INSTEAD.
    9. Anders Stenberg & Xavier Luna & Olle Westerlund, 2014. "Does Formal Education for Older Workers Increase Earnings? — Evidence Based on Rich Data and Long-term Follow-up," LABOUR, CEIS, vol. 28(2), pages 163-189, June.
    10. Sarah Brown & Karl Taylor, "undated". "Reservation Wages, Expected wages and the duration of Unemployment: evidence from British Panel data," Working Papers 2009001, The University of Sheffield, Department of Economics.
    11. Paul Verstraten, 2018. "The scope of the external return to higher education," CPB Discussion Paper 381, CPB Netherlands Bureau for Economic Policy Analysis.
    12. Simone N. Tuor Sartore & Uschi Backes-Gellner, 2012. "Educational diversity and individual pay: The advantages of combining academic and VET graduates in the workplace," Economics of Education Working Paper Series 0078, University of Zurich, Department of Business Administration (IBW), revised Nov 2020.
    13. Rasmus Thönnessen & Erich Gundlach, 2013. "The size of human capital externalities: cross-country evidence," Public Choice, Springer, vol. 157(3), pages 671-689, December.
    14. Braakmann Nils, 2010. "Fields of Training, Plant Characteristics and the Gender Wage Gap in Entry Wages Among Skilled Workers – Evidence from German Administrative Data," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 230(1), pages 27-41, February.
    15. Kristen Monaco & Steven Yamarik, 2015. "Are there human capital externalities in U.S. states? Evidence from the Current Population Survey," Economics Bulletin, AccessEcon, vol. 35(4), pages 2345-2362.
    16. Josh Martin & Rebecca Riley, 2025. "Productivity measurement: Reassessing the production function from micro to macro," Journal of Economic Surveys, Wiley Blackwell, vol. 39(1), pages 246-279, February.
    17. repec:sdo:regaec:v:24:y:2015:i:2_10 is not listed on IDEAS
    18. Uschi Backes-Gellner & Christian Rupietta & Simone N. Tuor Sartore, 2017. "Reverse educational spillovers at the firm level," Evidence-based HRM, Emerald Group Publishing Limited, vol. 5(1), pages 80-106, April.
    19. Hugo Reis & Paulo Guimarães & Pedro Portugal & Ana Rute Cardoso, 2022. "Human Capital Spillovers and Returns to Education," Working Papers w202219, Banco de Portugal, Economics and Research Department.
    20. Zehra Bilgen Susanlı, 2017. "Türkiye’de İşgücüne Katılım, İstihdam ve Beşeri Sermaye Dışsallıkları," Yildiz Social Science Review, Yildiz Technical University, vol. 3(1), pages 47-58.
    21. Cui, Ying & Martins, Pedro S., 2021. "What drives social returns to education? A meta-analysis," World Development, Elsevier, vol. 148(C).
    22. Filiztekin, Alpay, 2011. "Social returns to education in a developing country," MPRA Paper 35124, University Library of Munich, Germany.

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